S&P 500 1,135.65 -.57%
NASDAQ 2,003.20 -1.00%
Leading Sectors
Telecom +1.97%
Airlines +.38%
Gaming +.18%
Lagging Sectors
Biotech -2.17%
Semis -2.32%
Homebuilders -2.33%
Other
Crude Oil 37.15 -.35%
Natural Gas 6.08 -.57%
Gold 385.10 -1.71%
Base Metals 104.84 -2.11%
U.S. Dollar 89.47 +1.08%
10-Yr. T-note Yield 4.81 +1.01%
VIX 15.09 +.53%
Put/Call .76 -11.63%
NYSE Arms 1.05 +15.38%
Market Movers
IPIX +21.1% after saying its full-360 degree video surveillance systems are deployed at the G-8 Summit.
OVTI -29.03% after lowering 1Q estimates and saying it may restate prior quarter results.
DNA -5.91% after Sanford C. Bernstein downgrade to Market Perform.
DHB +30.6% after saying it was awarded a $239.4 million contract to supply the U.S. Army with the company's new armor that shields arms and shoulders.
BDY +15.3% after saying it has entered into a definitive agreement to acquire the assets of Bioglan Pharmaceuticals, a subsidiary of Quintiles Transnational, for $183 million.
TOM -10.96% after lowering 1Q/05 forecast.
NKTR -11.8% after saying its Exubera NDA won't come until 05.
Economic Data
Wholesale Inventories down .1% in April versus estimates of a .5% rise and a .5% rise in March.
Recommendations
Goldman reiterated Outperform on BIIB, AMLN, GILD, TRMS, CCL, RCL, FS, GDT and IP. Goldman sees PC growth of at least 12% in 04, any upside to this will drive stocks higher. Goldman rated NRG Outperform. Citi SmithBarney said to Buy STT right now, target $62. Citi reiterated Buy on KMB, target $72. Citi reiterated Buy on PCG, target $34. ROCK raised to Sector Outperform at CIBC, target $35. PXD raised to Outperform at CSFB, target $39. SPLS rated Outperform at CSFB, target $34.
Mid-day News
U.S. stocks are falling mid-day as interest rates rise ahead of several key inflation reports. AirTran is better situated than competitors as the cost of jet fuel increases, because it has "hedged" 50% of its fuel for the rest of this year and bought 15% for 05, CEO Leonard told CNBC. President Bush supports stem-cell research with limits, First Lady Laura Bush told CNN. TiVo will unveil Internet-based features that will allow subscribers to download films and music from the Web to their recorders' hard drive, the NY Times reported. Sovereign Bancorp is considering a bid for NY Community Bancorp, the NY Daily News said. The growth in health-care spending in the U.S. fell for the second year in a row in 03, because demand for health services decreased, the AP reported. Disney and three French banks agreed to bail out Euro Disney for the second time in a decade, Bloomberg reported. A government report showed inventories relative to sales dropped to an all-time record low of 1.12 month's supply in April, suggesting companies will have to order more from factories in coming months to catch up with demand, spurring production and adding to growth, Bloomberg reported. The U.S. Justice Department won't ask the Supreme Court to reverse a lower court's decision striking down federal rules that give AT&T and other carriers discounted access to local-telephone companies' networks, Bloomberg said. Crude oil is falling to a 6-week low after the Energy Department reported that U.S. oil and gasoline inventories rose last week. U.S. Treasury notes fell for the third day in four on speculation inflation will accelerate, leading the Fed to boost rates faster than anticipated, Bloomberg reported.
BOTTOM LINE: The Portfolio is down today as my semiconductor, telecom equipment and internet longs are declining. I have taken profits in many longs this morning and added several new shorts, bringing the Portfolio's market exposure to 50% net long. The Portfolio is up substantially for the year and I want to protect profits over the short-term. One of my new shorts is SSYS and I am using a $27.50 stop-loss on the position. I also shorted a few homebuilders. Inflation reports over the next week from the PPI and CPI will likely exceed expectations, further pressuring bonds. Moreover, I expect stocks to trade weaker to neutral as investor anxiety rises over the next 2 weeks ahead of the Fed rate hike, Iraqi handover, end of the quarter and Russell rebalancing. I then expect U.S. stocks to begin another up-leg at the end of the month or beginning of July.
Wednesday, June 09, 2004
Wednesday Watch
Earnings of Note
Company/Estimate
AMWD/1.02
HRB/3.16
MATK/.14
OVTI/.31
SFD/.51
TOM/.37
Splits
PNR 2-for-1
ZLC 2-for-1
Economic Data
Wholesale Inventories for April estimated +.5% versus +.6% in March.
Recommendations
Goldman Sachs reiterated Underperform on FHCC and Outperform on AVP, PXD. Goldman said lodging sector managements had trouble controlling their "glee" on how strong current trends are at their conference yesterday.
Late-Night News
Asian indices are modestly lower on declines in Japanese bank shares after Goldman Sachs lowered their ratings. Qualcomm, unable to meet demand for its chips, is negotiating with South Korean companies to build semiconductors that go into mobile phones, Electronic Times reported. Oracle has a "really good case" in its trial to stop the Justice Department from blocking the company's purchase of Peoplesoft, CEO Larry Ellison said at a trade show. Beijing may face power blackouts this summer because peak electricity demand is forecast to be 14% higher than a year ago, the Beijing News reported. Clear Channel Communications has agreed to pay an estimated $1.75 million in penalties to settle indecency complaint with the FCC, the NY Times reported. State Street Global Advisors said it expects to get approval this year to set up China's first exchange-traded fund, Bloomberg reported. Japan raised its estimate for first-quarter economic growth to a 6.1% annual pace, above the 5.8% economists expected. Gilead Sciences, CIT Group and Vornado Realty Trust may join the S&P 500 in the next few months as takeovers open at least five spots in the benchmark index, Bloomberg reported.
Late-Night Trading
Asian Indices -.50% to +.25% on average.
S&P 500 indicated -.08%.
NASDAQ 100 indicated -.03%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on another fall in energy prices tonight and continuing improvements in Iraq. Japanese GDP growth exceeded expectations as I expected. The Japanese consumer is contributing meaningfully to this recovery, unlike past failed recoveries, which leads me to believe it is sustainable and a very positive development for world economic growth. I will likely cut the Portfolio's market exposure into any market strength tomorrow as I expect Thursday's PPI and jobs numbers to exceed expectations, resulting in another rise in interest rates. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
AMWD/1.02
HRB/3.16
MATK/.14
OVTI/.31
SFD/.51
TOM/.37
Splits
PNR 2-for-1
ZLC 2-for-1
Economic Data
Wholesale Inventories for April estimated +.5% versus +.6% in March.
Recommendations
Goldman Sachs reiterated Underperform on FHCC and Outperform on AVP, PXD. Goldman said lodging sector managements had trouble controlling their "glee" on how strong current trends are at their conference yesterday.
Late-Night News
Asian indices are modestly lower on declines in Japanese bank shares after Goldman Sachs lowered their ratings. Qualcomm, unable to meet demand for its chips, is negotiating with South Korean companies to build semiconductors that go into mobile phones, Electronic Times reported. Oracle has a "really good case" in its trial to stop the Justice Department from blocking the company's purchase of Peoplesoft, CEO Larry Ellison said at a trade show. Beijing may face power blackouts this summer because peak electricity demand is forecast to be 14% higher than a year ago, the Beijing News reported. Clear Channel Communications has agreed to pay an estimated $1.75 million in penalties to settle indecency complaint with the FCC, the NY Times reported. State Street Global Advisors said it expects to get approval this year to set up China's first exchange-traded fund, Bloomberg reported. Japan raised its estimate for first-quarter economic growth to a 6.1% annual pace, above the 5.8% economists expected. Gilead Sciences, CIT Group and Vornado Realty Trust may join the S&P 500 in the next few months as takeovers open at least five spots in the benchmark index, Bloomberg reported.
Late-Night Trading
Asian Indices -.50% to +.25% on average.
S&P 500 indicated -.08%.
NASDAQ 100 indicated -.03%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on another fall in energy prices tonight and continuing improvements in Iraq. Japanese GDP growth exceeded expectations as I expected. The Japanese consumer is contributing meaningfully to this recovery, unlike past failed recoveries, which leads me to believe it is sustainable and a very positive development for world economic growth. I will likely cut the Portfolio's market exposure into any market strength tomorrow as I expect Thursday's PPI and jobs numbers to exceed expectations, resulting in another rise in interest rates. The Portfolio is 125% net long heading into tomorrow.
Tuesday, June 08, 2004
Tuesday Close
S&P 500 1,142.18 +.15%
NASDAQ 2,023.53 +.14%
Leading Sectors
Airlines +2.50%
Restaurants +1.08%
Computer Boxmakers +.85%
Lagging Sectors
Gaming -.89%
Biotech -1.03%
Homebuilders -2.44%
Other
Crude Oil 36.95 -.89%
Natural Gas 6.09 -.41%
Gold 392.10 +.08%
Base Metals 107.10 -.94%
U.S. Dollar 88.51 +.29%
10-Yr. T-note Yield 4.76 +.04%
VIX 15.01 -2.47%
Put/Call .86 +6.17%
NYSE Arms .91 +167.65%
After-hours Movers
DHB +40.0% after saying it was awarded a $239.4 million contract to supply the U.S. Army with the company's new armor that shields arms and shoulders.
REMC +7.87% after beating 1Q estimates.
CACH -8.91% after cutting 2Q and 04 forecasts.
Recommendations
Goldman Sachs reiterated Outperform on DTV and Underperform on VRTX. Scott Moritz wrote a positive column on AGR/A for TheStreet.com.
After-hours News
U.S. stocks finished modestly higher today as short covering and investors afraid of missing the recent rally boosted shares in the afternoon. After the close, President Bush said he may ask governments attending the G-8 summit starting tomorrow to help write-off Iraq's debts, the Financial Times reported. Lea Fastow, the wife of former Enron CFO Andrew Fastow, has been ordered to report to a prison in downtown Houston rather than the minimum-security facility her lawyers had sought, the Houston Chronicle reported. Crude oil futures fell to a six-week low on expectations of rising U.S. inventories, Bloomberg reported. The dollar had its biggest rise against the euro in three weeks after Greenspan said that interest-rate increases are coming and signaled the central bank is prepared to accelerate the pace of those increases if inflation exceeds forecasts. Almost daily stomach and urinary problems may help doctors diagnose ovarian cancer before it becomes deadly, according to a study in the AMA Journal. Shares of Sears and Kmart rose today on speculation that Sears may purchase some stores from Kmart, Bloomberg said. Mexico's tourism revenue grew 15% in the first four months of the year, double the pace in the same period of 2003, as an improving economy spurred travel and terrorism concerns kept U.S. travelers close to home, Bloomberg reported. The UN Security Council voted 15-0 to restore Iraq's sovereignty on June 30 and mandate U.S.-led forces to maintain security until the end of 2005, Bloomberg reported.
BOTTOM LINE: The Portfolio was unchanged on the day as my rising semiconductor and semi-equipment longs were offset by declines in my internet and industrial longs. I took profits in one of my industrial longs in the afternoon and added TZOO. I am keeping a stop-loss of $19.00 on this new long position. Today's muted action was positive for the Bulls considering the comments Greenspan made with respect to inflation and raising rates. I continue to expect an increase in the Fed Funds' rate of 50 basis points by June 30. With energy prices continuing to fall and interest rates stabilizing, another burst of buying activity in U.S. stocks is possible before a short-term top is formed. This will likely occur at any time. However, I will use any extreme strength to lighten market exposure ahead of several key inflation reports.
NASDAQ 2,023.53 +.14%
Leading Sectors
Airlines +2.50%
Restaurants +1.08%
Computer Boxmakers +.85%
Lagging Sectors
Gaming -.89%
Biotech -1.03%
Homebuilders -2.44%
Other
Crude Oil 36.95 -.89%
Natural Gas 6.09 -.41%
Gold 392.10 +.08%
Base Metals 107.10 -.94%
U.S. Dollar 88.51 +.29%
10-Yr. T-note Yield 4.76 +.04%
VIX 15.01 -2.47%
Put/Call .86 +6.17%
NYSE Arms .91 +167.65%
After-hours Movers
DHB +40.0% after saying it was awarded a $239.4 million contract to supply the U.S. Army with the company's new armor that shields arms and shoulders.
REMC +7.87% after beating 1Q estimates.
CACH -8.91% after cutting 2Q and 04 forecasts.
Recommendations
Goldman Sachs reiterated Outperform on DTV and Underperform on VRTX. Scott Moritz wrote a positive column on AGR/A for TheStreet.com.
After-hours News
U.S. stocks finished modestly higher today as short covering and investors afraid of missing the recent rally boosted shares in the afternoon. After the close, President Bush said he may ask governments attending the G-8 summit starting tomorrow to help write-off Iraq's debts, the Financial Times reported. Lea Fastow, the wife of former Enron CFO Andrew Fastow, has been ordered to report to a prison in downtown Houston rather than the minimum-security facility her lawyers had sought, the Houston Chronicle reported. Crude oil futures fell to a six-week low on expectations of rising U.S. inventories, Bloomberg reported. The dollar had its biggest rise against the euro in three weeks after Greenspan said that interest-rate increases are coming and signaled the central bank is prepared to accelerate the pace of those increases if inflation exceeds forecasts. Almost daily stomach and urinary problems may help doctors diagnose ovarian cancer before it becomes deadly, according to a study in the AMA Journal. Shares of Sears and Kmart rose today on speculation that Sears may purchase some stores from Kmart, Bloomberg said. Mexico's tourism revenue grew 15% in the first four months of the year, double the pace in the same period of 2003, as an improving economy spurred travel and terrorism concerns kept U.S. travelers close to home, Bloomberg reported. The UN Security Council voted 15-0 to restore Iraq's sovereignty on June 30 and mandate U.S.-led forces to maintain security until the end of 2005, Bloomberg reported.
BOTTOM LINE: The Portfolio was unchanged on the day as my rising semiconductor and semi-equipment longs were offset by declines in my internet and industrial longs. I took profits in one of my industrial longs in the afternoon and added TZOO. I am keeping a stop-loss of $19.00 on this new long position. Today's muted action was positive for the Bulls considering the comments Greenspan made with respect to inflation and raising rates. I continue to expect an increase in the Fed Funds' rate of 50 basis points by June 30. With energy prices continuing to fall and interest rates stabilizing, another burst of buying activity in U.S. stocks is possible before a short-term top is formed. This will likely occur at any time. However, I will use any extreme strength to lighten market exposure ahead of several key inflation reports.
Mid-day Update
S&P 500 1,138.89 -.13%
NASDAQ 2,015.54 -.25%
Leading Sectors
Broadcasting +1.15%
Restaurants +1.02%
Oil Service +.47%
Lagging Sectors
Biotech -1.16%
Gaming -1.28%
Homebuilders -3.02%
Other
Crude Oil 38.35 -.80%
Natural Gas 6.19 -.19%
Gold 392.30 -.56%
Base Metals 107.10 -.94%
U.S. Dollar 88.52 +.33%
10-Yr. T-note Yield 4.78% +.46%
VIX 15.33 -.39%
Put/Call .86 +6.17%
NYSE Arms .94 +176.47%
Market Movers
L -17.0% after LMI spin-off.
AGI -22.5% after cutting 04/05 forecast and JP Morgan downgrade to Underperform.
TTWO -5.22% after missing 2Q estimates substantially and cutting 3Q and 04 forecast.
CMTL +12.51% after beating 3Q earnings estimate substantially.
S +8.64% on optimism over same-store-sales.
OLG +6.98% after beating 4Q estimates substantially.
BRL -8.7% on worries over increasing competition.
DHM -15.8% after lowering 2Q estimates due to rising interest rates.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on GE, SAP, STZ, VZ and KRI. Goldman would Buy TRB on weakness, target $55. Goldman reiterated Underperform on CL and NSM. Goldman thinks problems at AGI are company-specific. Citi SmithBarney said field checks indicate networking sales up 8-10% quarter-over-quarter in June, resulting in most companies meeting or beating expectations, favorite is CSCO. Citi reiterated Buy on WMT, target $64. Citi reiterated Sell on BMY, target $25. Citi reiterated Buy on TGT, target $50.00. Citi reiterated Buy on LLY, target $82.00. Citi reiterated Buy on MAT, target $22.00. GDT raised to Buy at Deutsche Bank, target $62. ARTC rated Buy at UBS, target $30. ANSI rated Reduce at UBS, target $29. NIHD cut to Reduce at UBS. AA raised to Outperform at Bear Stearns. IACI rated Buy at Bank of America, target $43.
Mid-day News
U.S. stocks are mixed mid-day as comments from Alan Greenspan with respect to increasing inflation are offsetting falling energy prices. Harrah's Entertainment won't bid for Mandalay Resort Group, CEO Loveman told CNBC. The Massachusetts Bay Transit Authority will become the first transit agency in the U.S. to begin randomly searching commuter rail and subway passengers' bags to combat potential terrorism, the Boston Globe reported. Afghanistan President Karzai said bringing stability to the nation as it transitions to democracy in his first priority, the Washington Post reported. Russian may have its credit rating raised to investment grade this year as higher oil revenue boost the government's ability to pay its debt, S&P said. Nokia's market share fell in the first quarter to the lowest in about five years as clients picked clamshell and camera phones made by Motorola and Samsung, researcher Gartner reported. Airbus won an order from JetBlue for 30 additional planes worth $1.8 billion, Bloomberg reported. The dollar is rising against the euro after Fed Chairman Greenspan said the central bank is "prepared to do what is required" to stem inflationary pressure in the U.S. economy. The chairman of Israel's National Religious Party said he intends to resign as housing minister, a move that may lead to the breakup of Prime Minister Sharon's ruling coalition, Haaretz reported. Ford may need to step up investment in China after GM announced plans to spend $3 billion and more than double production, Bloomberg reported. Europe Union regulators reopened an investigation into Intel following complaints by AMD that the company was breaking antitrust rules, Bloomberg said. Microsoft appealed an European Commission ruling that orders it to change its business practices, Bloomberg reported. The G-8 are close to accord designed to make it harder for terrorist groups and rogue nations to gain nuclear weapons, Bloomberg reported. Crude oil futures are falling for the fourth time in five sessions on expectations that an Energy Department report tomorrow will show rising U.S. inventories.
BOTTOM LINE: The Portfolio is down modestly today as my internet and gaming longs positions are hurting performance. I took profits in a telecom equipment long this morning and added TASR long, thus leaving the Portfolio with 125% net long market exposure. I am using a $26.50 stop-loss on the position. I expect U.S. stocks to rally modestly later this afternoon on short-covering ahead of tomorrow's crude oil inventory numbers. Put/Call and ARMs readings are at relatively high levels as well. Finally, it is a psychological positive that the NASDAQ is holding recent gains above the 2000 level.
NASDAQ 2,015.54 -.25%
Leading Sectors
Broadcasting +1.15%
Restaurants +1.02%
Oil Service +.47%
Lagging Sectors
Biotech -1.16%
Gaming -1.28%
Homebuilders -3.02%
Other
Crude Oil 38.35 -.80%
Natural Gas 6.19 -.19%
Gold 392.30 -.56%
Base Metals 107.10 -.94%
U.S. Dollar 88.52 +.33%
10-Yr. T-note Yield 4.78% +.46%
VIX 15.33 -.39%
Put/Call .86 +6.17%
NYSE Arms .94 +176.47%
Market Movers
L -17.0% after LMI spin-off.
AGI -22.5% after cutting 04/05 forecast and JP Morgan downgrade to Underperform.
TTWO -5.22% after missing 2Q estimates substantially and cutting 3Q and 04 forecast.
CMTL +12.51% after beating 3Q earnings estimate substantially.
S +8.64% on optimism over same-store-sales.
OLG +6.98% after beating 4Q estimates substantially.
BRL -8.7% on worries over increasing competition.
DHM -15.8% after lowering 2Q estimates due to rising interest rates.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on GE, SAP, STZ, VZ and KRI. Goldman would Buy TRB on weakness, target $55. Goldman reiterated Underperform on CL and NSM. Goldman thinks problems at AGI are company-specific. Citi SmithBarney said field checks indicate networking sales up 8-10% quarter-over-quarter in June, resulting in most companies meeting or beating expectations, favorite is CSCO. Citi reiterated Buy on WMT, target $64. Citi reiterated Sell on BMY, target $25. Citi reiterated Buy on TGT, target $50.00. Citi reiterated Buy on LLY, target $82.00. Citi reiterated Buy on MAT, target $22.00. GDT raised to Buy at Deutsche Bank, target $62. ARTC rated Buy at UBS, target $30. ANSI rated Reduce at UBS, target $29. NIHD cut to Reduce at UBS. AA raised to Outperform at Bear Stearns. IACI rated Buy at Bank of America, target $43.
Mid-day News
U.S. stocks are mixed mid-day as comments from Alan Greenspan with respect to increasing inflation are offsetting falling energy prices. Harrah's Entertainment won't bid for Mandalay Resort Group, CEO Loveman told CNBC. The Massachusetts Bay Transit Authority will become the first transit agency in the U.S. to begin randomly searching commuter rail and subway passengers' bags to combat potential terrorism, the Boston Globe reported. Afghanistan President Karzai said bringing stability to the nation as it transitions to democracy in his first priority, the Washington Post reported. Russian may have its credit rating raised to investment grade this year as higher oil revenue boost the government's ability to pay its debt, S&P said. Nokia's market share fell in the first quarter to the lowest in about five years as clients picked clamshell and camera phones made by Motorola and Samsung, researcher Gartner reported. Airbus won an order from JetBlue for 30 additional planes worth $1.8 billion, Bloomberg reported. The dollar is rising against the euro after Fed Chairman Greenspan said the central bank is "prepared to do what is required" to stem inflationary pressure in the U.S. economy. The chairman of Israel's National Religious Party said he intends to resign as housing minister, a move that may lead to the breakup of Prime Minister Sharon's ruling coalition, Haaretz reported. Ford may need to step up investment in China after GM announced plans to spend $3 billion and more than double production, Bloomberg reported. Europe Union regulators reopened an investigation into Intel following complaints by AMD that the company was breaking antitrust rules, Bloomberg said. Microsoft appealed an European Commission ruling that orders it to change its business practices, Bloomberg reported. The G-8 are close to accord designed to make it harder for terrorist groups and rogue nations to gain nuclear weapons, Bloomberg reported. Crude oil futures are falling for the fourth time in five sessions on expectations that an Energy Department report tomorrow will show rising U.S. inventories.
BOTTOM LINE: The Portfolio is down modestly today as my internet and gaming longs positions are hurting performance. I took profits in a telecom equipment long this morning and added TASR long, thus leaving the Portfolio with 125% net long market exposure. I am using a $26.50 stop-loss on the position. I expect U.S. stocks to rally modestly later this afternoon on short-covering ahead of tomorrow's crude oil inventory numbers. Put/Call and ARMs readings are at relatively high levels as well. Finally, it is a psychological positive that the NASDAQ is holding recent gains above the 2000 level.
Tuesday Watch
Earnings of Note
Company/Estimate
CMTL/.24
TTWO/-.14
REMC/-.15
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Underperform on CL, PNY and Outperform on BAX, FDC.
Late-Night News
Asian indices are modestly higher, led by mobile phone-related companies, after Merrill Lynch raised this year's forecast for global shipments of handsets. MCI ranks lowest among the seven largest U.S. telephone companies in a survey of their ability to serve businesses with at least 500 employees, the Wall Street Journal reported. Car buyers in China defaulted on nearly $12 billion of car loans by the end of 2003, prompting the country's banking regulators to more closely monitor lending for vehicle purchases, the Standard reported. Israel and Egypt may soon agree to have Egypt increase its Gaza Strip security presence in preparation for Palestinian control of the area, the AP said. Venus will pass between the Earth and the Sun today for the first time in 121 years and three-quarters of the globe will be able to view the phenomenon, Bloomberg reported. Saudi Arabia's religious leaders issued an edict condemning terrorist acts and calling on Saudis to provide information about planned attacks, Bloomberg said.
Late-Night Trading
Asian Indices -.25% to +.75% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated -.20%.
BOTTOM LINE: I expect U.S. stocks to open modestly lower and then rally later in the day on short-covering and portfolio managers putting new money to work. A short-term top is likely to occur within the next couple of days as the major averages are reaching overbought levels and complacency is rising. I expect interest rates will begin rising again later in the week, as well. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
CMTL/.24
TTWO/-.14
REMC/-.15
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Underperform on CL, PNY and Outperform on BAX, FDC.
Late-Night News
Asian indices are modestly higher, led by mobile phone-related companies, after Merrill Lynch raised this year's forecast for global shipments of handsets. MCI ranks lowest among the seven largest U.S. telephone companies in a survey of their ability to serve businesses with at least 500 employees, the Wall Street Journal reported. Car buyers in China defaulted on nearly $12 billion of car loans by the end of 2003, prompting the country's banking regulators to more closely monitor lending for vehicle purchases, the Standard reported. Israel and Egypt may soon agree to have Egypt increase its Gaza Strip security presence in preparation for Palestinian control of the area, the AP said. Venus will pass between the Earth and the Sun today for the first time in 121 years and three-quarters of the globe will be able to view the phenomenon, Bloomberg reported. Saudi Arabia's religious leaders issued an edict condemning terrorist acts and calling on Saudis to provide information about planned attacks, Bloomberg said.
Late-Night Trading
Asian Indices -.25% to +.75% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated -.20%.
BOTTOM LINE: I expect U.S. stocks to open modestly lower and then rally later in the day on short-covering and portfolio managers putting new money to work. A short-term top is likely to occur within the next couple of days as the major averages are reaching overbought levels and complacency is rising. I expect interest rates will begin rising again later in the week, as well. The Portfolio is 125% net long heading into tomorrow.
Monday, June 07, 2004
Monday Close
S&P 500 1,140.42 +1.60%
NASDAQ 2,020.62 +2.12%
Leading Sectors
Homebuilders +4.55%
Gaming +4.14%
Semis +3.68%
Lagging Sectors
Fashion +.57%
Restaurants +.45%
Broadcasting +.14%
Other
Crude Oil 38.89 +.59%
Natural Gas 6.25 +.72%
Gold 394.70 +.05%
Base Metals 108.12 +1.75%
U.S. Dollar 88.22 -.03%
10-Yr. T-note Yield 4.76 -.21%
VIX 15.39 -8.28%
Put/Call .81 -18.18%
NYSE Arms .34 -46.87%
After-hours Movers
ATRM +5.76% after announcing that the Board of Directors has decided to explore various strategic alternatives for the company to maximize shareholder value.
REMC +12.39% after announcing it had received an initial $9.9 million production contract from Raytheon Missle Systems for the TOW upgrade program.
CYMI -4.83% after saying it expects second quarter 04 revenue to increase at the lower half of its prior guidance range and margins to grow at the upper end of the prior range.
Recommendations
Goldman reiterated Outperform on IGT, KO, PFE and HD. Goldman reiterated Underperform on BMY. Jim Cramer, of TheStreet.com, has another positive column on KMRT, saying it still isn't too late to buy.
After-hours News
U.S. stocks finished sharply higher today, sending benchmarks to six-week highs, on optimism over employment growth, stabilizing interest rates and declining energy prices. After the close, Japan's Prime Minister Koizumi said he believes North Korean leader Kim Jong Il is sincere in his aim to dismantle his country's nuclear program, the Financial Times said. Home Depot will set up a business-development office in China to prepare for its entry into the world's most populous market, Bloomberg report. Mandalay Resort Group's stock price rose above MGM Mirage's $68 a share bid for the company, signaling that investors expect MGM majority owner Kirk Kerkorian to increase his offer, Bloomberg said. Two engines from Iraqi surface-to-air missles, including one from an Al Samoud 2 missle banned by the UN, have turned up in a scrap yard in the Netherlands, Bloomberg reported. Texas Instruments narrowed its second-quarter sales forecast and said demand for its products is "slightly exceeding" projections, Bloomberg reported.
BOTTOM LINE: The Portfolio rose today on afternoon strength in my semiconductor and telecom equipment long positions. I exited a few of my biotech longs today as they hit stop-loss points and added a few new industrial, Chinese ADR and telecom equipment longs, leaving the Portfolio with 125% net long market exposure. One of my new longs is NTE and I am using an $18.50 stop-loss on the position. Volume for the major indices continues to disappoint, however advancing volume was 5 times greater than declining volume on the NASDAQ and breadth was very positive. Every sector I follow was up today. As well, the NASDAQ 100 broke convincingly up through its recent downtrend line. It was also very positive that U.S. stocks rose substantially and bonds didn't fall. I expect the revised estimate of Japanese GDP growth to exceed expectations tonight which should boost Asian shares and provide the catalyst for further positive action in U.S. stocks tomorrow.
NASDAQ 2,020.62 +2.12%
Leading Sectors
Homebuilders +4.55%
Gaming +4.14%
Semis +3.68%
Lagging Sectors
Fashion +.57%
Restaurants +.45%
Broadcasting +.14%
Other
Crude Oil 38.89 +.59%
Natural Gas 6.25 +.72%
Gold 394.70 +.05%
Base Metals 108.12 +1.75%
U.S. Dollar 88.22 -.03%
10-Yr. T-note Yield 4.76 -.21%
VIX 15.39 -8.28%
Put/Call .81 -18.18%
NYSE Arms .34 -46.87%
After-hours Movers
ATRM +5.76% after announcing that the Board of Directors has decided to explore various strategic alternatives for the company to maximize shareholder value.
REMC +12.39% after announcing it had received an initial $9.9 million production contract from Raytheon Missle Systems for the TOW upgrade program.
CYMI -4.83% after saying it expects second quarter 04 revenue to increase at the lower half of its prior guidance range and margins to grow at the upper end of the prior range.
Recommendations
Goldman reiterated Outperform on IGT, KO, PFE and HD. Goldman reiterated Underperform on BMY. Jim Cramer, of TheStreet.com, has another positive column on KMRT, saying it still isn't too late to buy.
After-hours News
U.S. stocks finished sharply higher today, sending benchmarks to six-week highs, on optimism over employment growth, stabilizing interest rates and declining energy prices. After the close, Japan's Prime Minister Koizumi said he believes North Korean leader Kim Jong Il is sincere in his aim to dismantle his country's nuclear program, the Financial Times said. Home Depot will set up a business-development office in China to prepare for its entry into the world's most populous market, Bloomberg report. Mandalay Resort Group's stock price rose above MGM Mirage's $68 a share bid for the company, signaling that investors expect MGM majority owner Kirk Kerkorian to increase his offer, Bloomberg said. Two engines from Iraqi surface-to-air missles, including one from an Al Samoud 2 missle banned by the UN, have turned up in a scrap yard in the Netherlands, Bloomberg reported. Texas Instruments narrowed its second-quarter sales forecast and said demand for its products is "slightly exceeding" projections, Bloomberg reported.
BOTTOM LINE: The Portfolio rose today on afternoon strength in my semiconductor and telecom equipment long positions. I exited a few of my biotech longs today as they hit stop-loss points and added a few new industrial, Chinese ADR and telecom equipment longs, leaving the Portfolio with 125% net long market exposure. One of my new longs is NTE and I am using an $18.50 stop-loss on the position. Volume for the major indices continues to disappoint, however advancing volume was 5 times greater than declining volume on the NASDAQ and breadth was very positive. Every sector I follow was up today. As well, the NASDAQ 100 broke convincingly up through its recent downtrend line. It was also very positive that U.S. stocks rose substantially and bonds didn't fall. I expect the revised estimate of Japanese GDP growth to exceed expectations tonight which should boost Asian shares and provide the catalyst for further positive action in U.S. stocks tomorrow.
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